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SEPTEMBER 2007 ISSUE

Safety Net Working Group Update

The Safety Net Working Group held a retreat on September 11 and 18. The two half-day sessions gave the group the opportunity to work together for an extended period of time.

The first meeting was held at Diastole Center in Kansas City, Mo., and was facilitated by Jari Holland Buck. Participants broke into small groups to focus on the development of principles for an effective safety net system. The principles were divided into three categories: patient principles, provider principles and system principles. The draft principles should be finalized at the next Safety Net Working Group meeting on October 30, 2007. 

Next, the groups brainstormed about activities, projects or tasks that could be implemented to help achieve the principles. Each group developed a comprehensive list. To conclude the session, participants discussed standards that could be applied to the activities to help determine those with the greatest merit.

The second day of the retreat was held at the Kauffman Foundation. The session began with the groups determining which of the standards from the first session were most important. Next, they applied those standards to the activities, projects and tasks from the first session to narrow down their lists. Each group reported their top activities to the rest of the participants. Activities were grouped together based upon common themes to establish a subcommittee structure:

• Provider relationships and advocacy
• Continuum of care and system capacity
• Outcomes/Information Sharing/Information Systems
• Access to care 

Kansas Health Policy Authority work group focuses on premium assistance plan

The Kansas Health Policy Authority (KHPA) established a Premium Assistance Work Group in July 2007. The Premium Assistance Program was authorized by SB 11, which stipulates that a premium assistance plan will be operational by January 2009 for eligible participants and their families. The work group is led by Andy Allison, KHPA deputy director.

The goal of this work group is to provide direction to the KHPA in the development and implementation of a Premium Assistance plan for working Kansas parents who are at or below 100 percent of the federal poverty level. 

The assistance program would pay the employee portion of health insurance premiums for working Kansas parents whose employers provide qualified health insurance products. For those whose employers do not provide health insurance, the program would provide a number of “approved” health insurance products for the parents to choose from, and pay the premiums.

In the Premium Assistance Program, children would receive coverage through their parents’ health insurance plan rather then through Medicaid or SCHIP. If the parents’ health insurance does not meet Medicaid requirements, wraparound services would be paid for by the state. 

KHPA anticipates releasing a Request for Information in September and a Request for Proposals in late 2007. There is still a great deal of work to be done to fully develop the details of the Premium Assistance Plan. All meetings are open to the public. More information is available at www.khpa.ks.gov.

Insure Missouri - "A First Step Toward Health Care Reform"

Missouri Governor Matt Blunt unveiled Insure Missouri on September 18, 2007, to help low-income workers obtain health insurance coverage. The plan is designed to be phased in over three years beginning in 2008. 

1. The first phase of the plan would begin in February 2008 and cover custodial parents whose income is below 100 percent of the federal poverty level (FPL) or $20,650 for a family of four.  It is estimated that the first phase of the plan would provide health insurance coverage to 54,000 parents who do not currently qualify for Medicaid. 
2. Beginning in July 2008, Phase 2 would cover an additional 131,500 working parents and working adults. This includes adults, with and without children, with incomes up to 185 percent of the FPL, or $38,203 for a family of four. 
3. During Phase 3, the plan would cover employees of small businesses with less than 25 employees. The Missouri General Assembly will determine the eligibility criteria for businesses. 

Those eligible for the plan would choose from approved health insurance plans that are offered by health insurance companies. The benefits provided under each plan must compare with those offered to Missouri state employees. The state would pay all or a portion of the premium costs for the health insurance, dependent upon an individual’s income, using a sliding scale.

At a minimum the health insurance plan benefits must cover the following;

1. Prescription drugs
2. Emergency services
3. Physician services
4. Inpatient/outpatient hospital services
5. Diagnostic services
6. Urgent care
7. Home health services
8. Durable medical equipment
9. Inpatient/outpatient mental health services

The new plan would be financed with a combination of state, federal, individual and employer contributions. For Phase 1 of the plan to take place the state must receive approval of a Medicaid Plan Amendment through the Centers for Medicare and Medicaid. Upon approval, the state will receive matching federal dollars to fiscally support the program. Phase 2 and beyond will require legislative approval and appropriations support before they can be implemented. 

Kansas Health Policy Authority Working Councils share ideas

The Kansas Health Policy Authority (KHPA) conducted a two-day strategic planning session in August. The process was designed to gain board direction regarding the health reform policy initiatives that the KHPA would include in their report to the Kansas legislature. This report is due on November 1, 2007. 

The KHPA Board heard reports from three working councils, including the Consumer Council, the Provider Council and the Purchaser Council. Membership lists for each council are available at www.khpa.ks.gov. Each group was asked to consider the following issues as they related to providing and protecting affordable health insurance:

1. What would the benefit package contain?
2. What is the role of small business and should there be incentives?
3. Should employers be mandated to provide health insurance coverage?
4. What is the individual responsibility to pay for health insurance?
5. Should there be a health insurance connector?
6. Should there be an individual health mandate?
7. How will this be funded?

In general, the Consumer Council reported that a broad benefit package with a strong prevention component was ideal. All small businesses should participate and there should be a tiered, equitable system of incentives. The Consumer Council was mixed on requiring employer contributions to health insurance but clearly indicated that a mandate to require health insurance for all Kansans would be required. The Consumer Council supported an insurance connecter and the use of a tobacco tax to fund health reform efforts in Kansas. 

The Provider Council felt that multiple benefit packages should be available to Kansas consumers. The benefit packages should incorporate best practices in preventive care. The Provider Council agreed with the Consumer Council that all small businesses should participate and that incentives should be available. They also both agreed that there would need to be an individual mandate, but expressed concern regarding the impact that this would have on the current health care system. The Provider Council also expressed support for exploring an insurance connector. They did not specifically designate a funding source for health reform.

The Purchaser Council felt that an affordable benefit package should be designed with consumer input. In general, this group supported a more streamlined benefit package. They agreed with the other two councils that all small businesses must participate and that incentives to do so should be available.  However, they felt strongly that employer contributions should not be mandated. They did support an individual health insurance mandate. They were opposed to an insurance connector and felt they had general consensus regarding the use of a tobacco tax to fund health reform efforts. 

Kansas Health Reform - Economic Analysis

In August, Steve Schramm, managing director of SchrammLeigh LLC, provided information to the Kansas Health Policy Authority (KHPA) Board and audience regarding a variety of health insurance reform models. Schramm presented the following plans:

• A Baseline Scenario, based on 2004 and 2005 Kansas data and a presumption that SB 11 Premium Assistance program had been fully implemented. 
• A Reference Scenario, which contained a Medicaid waiver expansion that includes children and their parents up to 250 percent of the federal poverty level. 
• An Affordable Coverage Scenario, which included the implementation of a Health Insurance Connector and a voluntary expansion for individuals and businesses.
• A Universal Coverage Scenario, which included the implementation of a Health Insurance Connector with a mandatory expansion for individuals and businesses.

Schramm reviewed an economic analysis of the models based upon Kansas demographics. He noted that under the Baseline Scenario the percentage of uninsured Kansans would be 8 percent. This was reduced to 5 percent in the Reference Scenario and 3 percent in the Universal Coverage Scenario. He noted that this would be reduced to 2 percent if the Universal Coverage Scenario were enforced. Schramm also noted that he needed more information from the board to determine whether the Affordable Coverage Scenario would reduce the percentage of uninsured from the baseline rate. 

Schramm provided projected costs associated with the Reference Scenario and the Universal Coverage Scenario. In the Reference Scenario he projected an increase of $329 million and a decrease in costs to the uninsured of $336 million. In the Universal Coverage scenario he projected $630 million in increased costs and $463 million in decreased costs to the uninsured. 

KHPA Board members reviewed the information and requested that Schramm gather additional data for the board's September meeting. They also requested development of a new scenario that would have an individual mandate and use a single payer source. 

New Kansas Disproportionate Share Hospital Formula Approved

The federal government provides special funding to hospitals that treat significant numbers of Medicaid beneficiaries and the uninsured. This funding is known as disproportionate share or DSH funding. The Kansas Health Policy Authority (KHPA) began working with concerned stakeholders in Fall 2006 to discuss possible changes to the Kansas DSH program. The KHPA met with hospitals and convened an advisory group. The advisory group provided feedback on a number of possible DSH reform proposals. 

The goals of the DSH reform effort were to:

1. Devise a formula that would always allow the state to expend the maximum amount allowable under federal regulations.
2. Direct resources to hospitals that provide a high level (disproportionate) of care to Medicaid beneficiaries and the uninsured.
3. Increase reimbursement to facilities that, relative to their size, provide or incur a greater share of the burden of caring for Medicaid patients and uninsured patients.
4. Treat losses equally.
5. Create more predictability and stability in DSH payments over time. 

With input from a variety of hospitals and technical advisors, KHPA proposed a change in the DSH formula and included additional reforms:

1. Change the base Medicaid reimbursement for Kansas Critical Access Hospitals (CAH) to cover costs and remove them from the DSH pool.
2. Limit 10 percent of Kansas Medicaid DSH payments to out-of-state hospitals.
3. Exclude Kansas University Hospital from the DSH formula.
4. Provide a smooth three-year transition.
5. Provide one-time, 50 percent payments to multi-year DSH hospitals that lose eligibility. 

The KHPA Board of Directors approved the changes in the DSH payments on August 20. For details about how this new plan affects hospitals in the Kansas City area, see the KHPA allocation table. DSH funds for Children’s Mercy will be reduced from $17,806,244 to $4,350,574 over three years. DSH funds for Kansas University Hospital will be reduced from $3,046,207 to zero. However, DSH funds for Providence Hospital will be increased from $475,932 to $4,144,547 over three years.  Representatives from KHPA indicated that they are working with both KU and Children’s Mercy to develop alternative funding mechanisms that will replace these funds.